the detection and prevention of manipulations in the balance sheet and the cash flow statement

Financial statements which consist of objective, real and reliable information represent the key basis for making many business decisions. If, when writing financial statements, certain manipulation techniques are used for displaying the best possible results of transactions, the quality of financial reports will be endangered. Many financial frauds have led to a great mistrust in the system of financial reporting and the profession of accounting and auditing, which are often accused of the emergence of fraud and losing trust in the reliability of financial information by many users and economic decision makers. These are the reasons why the paper discusses the techniques of manipulation in financial statements, especially in balance sheets and cash flow statements, since these forms of manipulation are harder to detect and prevent when compared to manipulations of revenues and expenses in the income statement.